• Experts seek deliberate actions to tackle FX crisis, insecurity, corporate failure
• Workers demand timely closure of new minimum wage negotiation
• Safety, infrastructure development, vessel building top maritime agenda
• Telcos to reap from rising content consumption
• Controversial USSD debt carried into 2024
Against the backdrop of tougher projections for the New Year, economists and allied professionals have said Nigerians could be given a soft landing with the right policy formulation, ruthless implementation, as well as a clear departure from the fiscal indiscipline that marked the previous year.
From the energy sector to capital market, and maritime to labour, the economy seems to be at a crossroads. Experts, however, said there are prospects that the country’s negative trajectory could be the pivot to a clean slate to begin a new growth. The caveat is that the authorities would need to be intentional in charting the new course.
They have called on President Bola Ahmed Tinubu, who will mark his first anniversary in May, to provide the much-needed exemplary leadership to steer the country from collapse and prevent the current doom loop.
Already, the federal government spends almost 100 per cent of its retained revenue servicing its debt, which accounts for a larger part of the outstanding N87.9 trillion. Tinubu lamented the cost of debt servicing last weekend when he appealed to the Senate to approve securitisation of the outstanding N7.388 trillion Central Bank of Nigeria’s (CBN) overdraft to the government in addition to N22.7 trillion earlier restructured.
Besides the debt overhang, the government is also battling with worrisome headline inflation, which has hit 28.2 per cent, low and falling public revenue, a challenged labour market that is turbo-charged by ‘exiting’ companies, conflict between the organised labour as well as government among other issues.
Of course, not one of the challenges has gone with last year. Subject-matter experts, however, think new approaches and more creative handling could make some difference in how the issues affect the people, and perhaps, set the stage for trend reversal.
The Petroleum Industry Act (PIA) was the biggest issue last year, but the legislation was short of its full weight for lack of full implementation. This year, stakeholders expect full implementation of the law. They also expect decisive actions in the electricity sector, full deregulation of the downstream petroleum sector as well as an increase in oil production in 2024.
Energy expert, Prof. Wunmi Iledare, said full implementation of the PIA remained the key instrument to turn the oil sector in 2024.
He lamented the poor implementation of the legislation, which he described as the major game changer for the success of the sector.
In 2023, the oil sector faced serious turbulence with oil production falling to a record low of about 900,000 barrels per day from all-time high of about 2.4 million barrels per day. The development worsened the country’s FX and budget implementation crises.
Tinubu is currently projecting to increase oil and gas revenue, which was N2.23 trillion in 2023 to N7.69 trillion in 2024, representing an increase of 344 per cent.
At the same time, the government is expecting crude oil production to move to 1.78 million barrels per day against the current 1.250 million amidst uncertain prices.
Although oil prices have been projected to stay around $75 per barrel on average through the year in alignment with Nigeria’s budgetary benchmarks, the import of petroleum products according to most stakeholders must see a significant reduction in the year to reduce the pressure on foreign exchange.
Chairman of International Energy Services Limited, Dr Diran Fawibe, said the country must find sustainable solutions to crude oil theft and allow investors to optimise their investments.
Without such seriousness, the sector would not witness significant investment in the year as oil production would remain a challenge at a time most refineries are coming up with demand for crude oil.
Managing Partner at Kreston Pedabo, Ajibade Fashina, wants a priority on diversification from the oil sector into modernising and mechanising the agricultural sector, promoting value addition, and attracting private sector investments.
He also sees the need to encourage the growth of manufacturing industries to reduce dependence on imported goods and create employment opportunities.
Despite contributing 15.97 per cent to output in Q3 2023, the information and communications technology (ICT) sector had its share of challenges last year.
The telecommunication operators may be poised for a shutdown with the deposit money banks (DMBs), who have carried over N200 billion USSD debts owed telcos operators into the New Year.
The President of the Association of Telecoms Operators of Nigeria (ATCON), Tony Emoekpere, said the demand for data is expected to rise steadily this year, driven by Nigeria’s sizable youth population and increase in content consumption.
To meet the demand, he said increased investments in transmission networks, edge data centres and innovative communication sites would be necessary.
“While 5G technology adoption will grow, limitations in infrastructure and smartphone costs may impede coverage expansion. Expectations include continued 4G network expansion into semi-rural areas and heightened competition in fibre-to-the-home (FTTH) services as major MNOs compete with smaller players,” Emoekpere stated.
Also, he noted, effective policy implementation remains a key challenge. He pointed out that implementing the ministry’s current policy would significantly impact the sector positively.
According to him, tariff reviews and standardised data rates for enterprises would be essential.
The ATCON boss noted that addressing the critical nature of telecommunications infrastructure is crucial for quality of service, which requires a secure framework.
He said while infrastructure providers invest in alternative energy sources, a more stable power grid would significantly reduce costs and enhance service quality.
On his part, the Chairman, Mobile Software Nigeria, Chris Uwaje, said 2023 digital landscape delivered resilience to catch up with the dense challenges of global digital transformation, stressing that the efforts by the fintech community are commendable.
“Regrettably, the trend showed deeper consumerism characteristics. The trend further negatively inflamed the economy with extraordinary inflation, which pushed over 150 million Nigerians into a state of stagflation.
“The evidence is visibly portrayed by the wave of ‘japa’ syndrome – engulfing major professional talents and somersaulting education to submission,” he said.
Last year, the stock market managed to snatch some wins, gaining about 46 per cent. But experts said more actions are required to bring home the gains of the market and make it more supportive of the broader economy.
Investors have also charged the government to tackle challenges in the foreign exchange (FX) to stabilise the naira as a necessary action to unlock the potential of the capital market in growing the economy.
According to experts, despite the strong operating performance recorded by quoted companies, corporate earnings have been impacted by naira depreciation, which has led to the exit of many manufacturing companies. Except urgent actions are taken to help companies reduce losses due to naira depreciation, experts have warned, more companies could close shops this year, a situation that would compound unemployment woes.
Speaking on this, President of New Dimension Shareholders Association, Patrick Ajudua, cited nine firms in the telecommunication, FMCG and manufacturing sectors that incurred close to N960 billion in losses due to naira depreciation in the first half of last year and warned that there is a limit to how much as such losses the economy would be able to absorb.
He stressed the need to address insecurity, saying businesses could only thrive in a secure and conducive environment.
President of the Independence Shareholders Association of Nigeria, Moses Igbrude, said businesses need incentives to survive, saying deliberate policies would attract more multinational firms to the stock market and boost activities in the primary market segment, improve liquidity as well as deepen the market.
He was hopeful of introducing fiscal and monetary policies to stimulate private-sector investment.
“I expect the bank recapitalisation exercise to spur activities in the stock market. I expect to see many rights and public offerings in the stock market next year. I call on the government to pay more attention to the capital market and formulate policies that will stimulate activities in the market,” he said.
For workers and households, 2023 was truly horrendous, dominated by the crisis caused by the removal of fuel subsidies, higher inflation and falling real disposable incomes. These left many lower income working families cutting back down on their consumption.
Hence, labour experts believe the quest for a wage system that is sufficient to provide a decent living for workers and their family members is crucial and should come on stream as the new year begins.
They argued that the urgent need for a pay raise for Nigerian workers is no longer debatable, especially with a more than 300 per cent rise in the price of premium motor spirit (PMS), the depreciation of the naira and an increase in prices of goods and services.
President of the Nigeria Labour Congress (NLC), Joe Ajaero, hoped the content of the new minimum wage would approximate a living wage and that the government would see it as an opportunity to put in place standards that would ameliorate most of the sufferings it foisted on Nigerian workers because of the subsidy removal.
He said the government should see the negotiation of a new wage as an opportunity and work with the tripartite committee to quickly deliver a living wage to Nigerian workers.
He said the government should, in the first quarter, fulfill all its promises to the citizens as contained in the 15-point agreement signed on October 2, 2023, during negotiations with labour.
Part of the agreements, the NLC chief said, was the issue around the compressed natural gas (CNG) buses and the conversion kits, calling on the government to implement the agreement.
He said the buses, especially when sourced locally, have a huge multiplier effect as it would increase employment and guarantee income for the masses as well as make the economy better.
Similarly, Deputy President of the Trade Union Congress of Nigeria (TUC), Dr Tommy Okon, said that the year would come with a mixed feeling both for workers and government, stressing that the implementation would either bring stability or industrial unrest to the country.
According to him, it is a year that labour will engage the government at all levels. Noting that the government was conscious of industrial peace and harmony, he said the government also had to do the needful by encouraging employers of labour to pay the national minimum wage as would be agreed by the tripartite committee, comprising the government, labour and employers.
As employers’ body, who is also part of the tripartite committee, Director-General of the Nigeria Employers’ Consultative Association (NECA), Adewale-Smatt Oyerinde, said as an organisation representing the Organised Private Sector (OPS), expressed his organisation’s commitment to the national movement.
He canvassed for the negotiation of a new wage that is commensurate with the realities of the current situation.
While he mentioned that there has been a conversation about the concept of a living wage and the reasons why a living wage is desirable, he said globally and even at the high end, there is no framework for arriving at a living wage.
Oyerinde said the conversation, for now, is going on at the International Labour Organisation (ILO), stressing that employers support the conversation and are championing the conversation for a living wage “but there must be a framework”.
“We have Convention 131 on the setting of the National Minimum Wage but we don’t have any framework for a living wage so that makes it difficult for us to be talking of a living wage because on what foundation or what parameter are we going to start that conversation but for national minimum wage we have a parameter that is already established and that will also help us to arrive at the next national minimum wage, whereby whatever figure that we arrive at will be a figure that would be acceptable to all states,” he said.
Recall that the NLC and TUC listed conditions for the proposed review of the national minimum wage, saying the continuous rise in inflation and the devaluation of the naira must be checked before the salary increase announced by the Federal Government could be considered.
The organised labour explained that the cost of virtually all consumables in Nigeria had been on the rise, stressing that if this should continue; any amount of money that would be added to the minimum wage might not meet the expectations of workers.
The TUC had demanded payment of a new minimum wage of N200,000 monthly, while the President, the National Union of Banks, Insurance and Financial Institution Employees (NUBIFIE), Abakpa Anthony, said the minimum wage an average worker should earn could range between N120,000 to N150,000, adding that both the high-earning workers and their poorly paid counterparts shop in the same market.
The President-General of the Maritime Workers Union of Nigeria (MWUN), Adewale Adeyanju, said N300,000 should be the minimum wage for the average worker in the country.
Stakeholders in the maritime sector had high expectations about 2023. Sadly, anti-trade policies and unfulfilled promises saw reduction in many maritime businesses shutting down and rendering many out of jobs.
Although the sector witnessed the creation of the Ministry of Marine and Blue Economy to address the challenges of the industry, the harsh economic reforms dealt a big blow to the maritime industry.
Yet, stakeholders have revealed their expectations for the sector even though they shared their reservations about the government’s willingness to take bold decisions to change the trajectory.
General Manager, Area Offices Coordination of the National Inland Waterways Authority (NIWA), Tammy Fiberesima, said the government should update and renovate the planning and running of the maritime business leveraging verified technologies driven by the right and committed professionals.
The maritime sector has lacked the application of effective and efficient technology, which has caused delays and cost those doing business and the economy huge losses.
Fiberesima said high priority should be given to maritime safety, both preventive and protection measures, including a workable national maritime search and rescue scheme as well as boat surveys and registrations.
Although the nation’s waters have been declared piracy-free in the Gulf of Guinea, several illegal activities still take place, especially the stealing of crude oil which has led to the continuous burning of vessels caught by the Nigerian Navy as well as illegal fishing by foreigners and their attacks on Nigerian trawlers.
Fiberesima also pointed at infrastructural development on the waterways, noting that priority should be given to the improvement of channels, adequate standard terminal facilities /boatyards as well as the availability of seaworthy and fit-for-purpose vessels.
He said for the adverse effects of globalisation on capacity building for boat and barge builders, there should be a push for joint ventures for boat building business between established overseas companies and local players, to site and run boatyards in Nigeria.
The General Secretary of the Lagos State Truck and Cargo Operators Committee (LASTCOC), Mohammed Sani, called for the removal of human impediments to the free flow of traffic at Lagos ports, trade facilitation, seamless evacuation of cargoes and ease of doing business in the maritime industry.
He also called for the elimination of corruption and extortion along the port’s access roads as well as the positive political will to eradicate major challenges affecting the maritime industry.
The President of Maritime Professionals Forum (MARPRO), Captain Akanbi Oluwasegun, said in June 2022, the Director General of NIMASA, Dr. Bashir Jamoh, had promised that the agency would start issuing Unlimited Management Certificate of Competency (CoC) by the first quarter of 2023, noting that the year has ended with no sign of fulfilling his promise.
He said by 2024 people should start facing the consequences of their actions and inactions of their failed achievements.
Oluwasegun also stressed that it was high time the country had a dedicated coastguard to take responsibility for the nation’s coastal water and creeks, noting that adequate coastal security would enhance coastal trades, marine transportations, ferry operations, tourism and fishing.
He added that the shipping and seafaring industry also looks forward to activating the unambiguous policies for ease of doing business, noting that militarising the maritime domain has frustrated so many investors.
Oluwasegun said the country needs a civil approach within its maritime economic environment, adding that unfair detention, intimidation and exploitation need to stop.
Oluwasegun also emphasised that the Cabotage implementation must be taken seriously, with somebody held responsible.
He said the minister should provide a secured and direct platform to receive real time feedback from the seafarers, and other marine professionals, noting that this would create a check and balance within the sector.
He said the industry practitioners can no longer tolerate any extravagant lifestyle in the sector, adding that every department must show transparency and accountability.
The former Interim President of the Association of Nigerian Licensed Customs Agents (ANLCA), Ujubuonu Pius, said for there to be any appreciable impact in the maritime industry, there must be policy reviews, critical analysis of the policy architecture pre-Ministry of Transportation and also a critical prognosis of the new ministry.
He also called for massive investments in infrastructural development in the downstream and upstream sectors.
The Vice Chairman of Business Action Against Corruption (BAAC) Integrity Alliance, Lagos, Jonathan Nicol, said the high cost of doing business in the maritime industry has forced businesses to either continue with the harsh environment or relocate to a saner one, which has seen more cargo diversion continue.
He called for the removal of abnormal pressures such as the high cost of diesel and fuel, the introduction of tax returns, the closure of small and medium businesses from the Corporate Affairs Commission and unrealistic tax reforms.
Nicol also called for the reduction in terminal charges, shipping costs, Customs duty tariffs, haulage of goods, government agencies operating in the ports as well as the total stoppage of closure of ports due to unnecessary Industrial activities, among others.
Source: The Guardian